M/S. Calcutta Security Printer ... vs National Thermal Power ...
1994 Latest Caselaw 716 Del

JUDGMENT

Usha Mehra, J.

1. Calcutta Security Printer Limited has sought recovery of Rs. 10,38,953.50 paise from National Thermal Power Corporation Limited (in short 'NTPC') as rental charges on account of storage of printed material of the defendant in the strong room of the plaintiff. The defendant had agreed to pay the rental charges at the rate of Rs. 50/- per C.F.T. per month payable in advance quarterly. Pursuance to this understanding arrived at between the parties, the plaintiff permitted the defendant w.e.f. 1st July. 1988 to store its goods in plaintiffs strong room on the said rental charges. Bills were raised for the hire charges on the rates quoted and agreed upon. The same have not been paid though the defendant continued to store their valuable documents/securities in plaintiffs strong room without making payment. Hence the suit.

2. The defendants instead of filing the written statement field the present application under Section 34 of the Arbitration Act seeking stay of the suit which has been listed as I.A. 586/93.

3. It is the case of the defendant that there exist an agreement between the parties which contain Arbitration Clause. Hence, the suit is liable to be stayed. This assertion has been refuted and denied by the plaintiff.

4. After going through the documents placed on record and after hearing the learned counsel for the parties, I am of the view that the suit cannot be stayed. The agreements relied upon by defendant were for supply of MICR papers and printing of Bond Certificates/interest warrants (in short BCs/IWs for 2nd and 3rd public issue of p. 111.2 "NTPC Bonds. Clause 2.1 of the said agreement deals with the "scope of work" which provided for manufacture, transportation and supply of MICR grade paper including water marking device, security printing of BCs/IWs EDP over printing and dispatch of BCs/IWs. Clause 2.2 deals with manufacture of papers and water making device. Clause 2.3 states that water marking devices as per the design approved by the NTPC shall be the property of the NTPC. Clauses 2.2.2 and 2.2.3 stipulated that paper for printing was to be procured by the plaintiff from M/s. Sidhartha Paper Ltd. and the same was to be procured in sheets. Clause 2.2.4 provided counting of sheets on electronic counting machines. Serial numbers and printed numbers at leading/tail edge were to be marked by plaintiff. Clause 2.2.5 provided maintenance of proper records in respect of consumption/wastage of paper. Clause 2.3 and 2.3.1 deal with security printing of BCs/IWs, the same would be printed with different background designs separately for two schemes. Clause 2.3.2 prescribe that Bonds shall be in five denominations. Clause 2.4 deals with over printing of Bond Holder details on BCs/IWs through electronic printers. Clause 2.4.1 stipulated the Bond holder details as required by NTPC shall be printed on BCs/IWs from data provided by NTCP on computer paper etc. Clause 2.4.2 deals with dispatch journal, forwarding letter etc. Clause 2.5 deals with the scope of the work/supply. Clause 2.6 lays down that work to be performed strictly as per the bid documents referred to in para 1.0 except as specifically amended/modified in the Award letter. Counsel for defendant admits that as per agreements dated 8th January, 1988 and 28th February, 1989, there is no stipulation of storage of the goods free of costs. However, defendant has placed reliance on the contract awarded vide award letter dated 28.2.89 for manufacture and supply of MICR paper and printing of BCs/IWs for 3rd Public Issue of NTPC Bonds. As per this contract the defendant contended that plaintiff was required to supply the printed material goods in accordance with the instructions to be issued by the defendant. As such plaintiff was bound to keep these goods in its safe custody till the instructions for the supply were received by the plaintiff. Storage of goods, therefore, becomes part of the contract. This argument, to my mind, is far fetched. The plaintiff cannot be asked to keep the goods of the defendant in his safe custody in the strong room constructed by him till such time instructions are received from the defendant. If that had been the intention then such a clause ought to have been incorporated in these agreements. Moreover, it does appeal to reason that after manufacture of these confidential documents like BCs/IWs, the defendant if does not take delivery nor gives instructions what to do with the same for couple of months then the plaintiff will be burdened with the liability of keeping those in his strong room free of cost.

5. Counsel for the defendant then contended that in the contract in clause 2.2.4 the word "Store" has been mentioned, therefore, the storage of material was a part of the contract. Moreover in clause 2.2.5, the paper waste/spoiled BCs/IWs were to be accounted for and were to be destroyed only in the presence of NTPC official or under their authorisation. Therefore, till such time this was done the material was to be kept by the plaintiff in its safe custody without any charge. Hence, relying on these clauses he contended that storage was a part of the contract. I am afraid this argument is also without force. The word "Store" appearing in clauses 2.2.4 means prior to the use of the paper sheet and not after the manufacturing of BCs/IWs. Similarly in clause 2.2.5 the waste/spoiled BCs/IWs were to be destroyed in the presence of NTPC official and under their supervision, but nowhere it envisaged that after the manufacture of the BCs/IWs the plaintiff would store those in its strong room. Bare reading of these two clauses shows the hollowness of the argument of the defendant. These clauses do not support the contention of counsel for defendant. Similarly the reliance on clause 2.5 by the counsel is also of no help to him. This clause talks of the scope of the work/supply and the work which was incidental to the main work. Storage of the manufactured goods in strong room of the plaintiff by no stretch of imagination can be called incidental to the manufacturing and printing of papers work assigned to the plaintiff. Rather, reading of clause 9.0 and 9.1 under the head INSPECTION shows that printer/paper manufacturer would give minimum 10 days notice to enable defendant to send its representatives for inspection and thereafter plaintiff would dispatch the goods. This shows goods were not to be stored by the plaintiff after manufacturer rather were to be dispatched immediately after inspection and inspection work was to be completed at the earliest. The fact that "Rental Charges" of the storage of material in the strong room of the plaintiff was not part of the contract can be seen from the correspondence exchanged between the parties. Reference can be had to the letter written by the plaintiff after discussion with defendant with regard to the storage on 10.6.1986 and the reply sent by the defendant on 4.7.1988 which are reproduced as under :

 "Ref : No. C45/BONDS/NTPC/88/2416                  June 10, 1988 
 

  The Manager (Bonds),  

National Thermal Power Corpn. Ltd., 

 Corporation Centre, NTPC Square,  

62-69, Nehru Place, New Delhi-110019.  
 

  Dear Sir,  
 

        Reg : Storage of blank bound and interest Warrants.   
 
 

With reference to the discussion the undersigned had with Shri T. V. Subramanian and Shri R. K. Sharma regarding storage of your blank Bonds and Warrants in our Strong room facility at Kanpur, we are pleased to quote Rs. 50/- per etc. per month IPCL has rented 40 cft. at this rate for the storage of blank Bonds of Warrants.

In view of your bulk requirement of approximately 250 eft., we would be pleased to allow you a discount of 20% on the quoted rate.

The above rate does not include Insurance, which we shall arrange at Kanpur at your cost.

The total value of the material to be stored with us would be approximately Rs. Seven lacs. Insurance @ 1% would work out to within Rs. 7,000/- per year or even less, in case the risk is limited to fire, termite and water damage.

We shall request you to let us have your confirmation so that the space may be reserved for you.

Assuring you of our best attention at all times, we remain,

Yours faithfully,

for CULCUTTA SECURITY PRINTERS LTD.

(DEEPAK BHARGAVA)

TECHNICAL DIRECtorS"

"National Thermal Power Corporation Ltd.

 (A Government of India Enterprise) Corporate Central, 
 
New Delhi  
   Ref. No. 01 : FA : Bonds : 11/37                 Dated : 4.7.1988 
 

  Calcutta Security Printers Limited 7/48, Tilak Nagar, P.O. Box No. 2, Nawabgani, KANPUR : 208002.  
      

  Subject : Storage of blank Bonds and Interest Warrants  
 

  Dear Sir,  
 

We refer to your letter No. C45/Bonds/NTPC/88/2416 dated June 10, 1988 and wish to advise you that the rates quoted by you for storage of our blank Bonds and Interest Warrants in your strong room have been considered to be very much on high side. Under the circumstances, it may not be possible for us to accept the rates quoted by you, however, we would like to request you to call on your convenience for the purpose of discussion in this matter.

Yours faithfully,

(Rakesh Sharma)

Manager (Bonds)"

6. It is not disputed that without getting the rental rates settled the defendant had been storing its cartons containing blank Bond Certificate and blank Interest Warrants. In this regard reference can be had to letter dated 5.7.1988, which is reproduced as under :

 "Ref. No.                                        5 July, 1988 
 

  M/s. National Thermal Power Corporation 62-69, Nehru Place, New Delhi-110019.  
 

  Dear Sirs,  
 

We confirmed having stored 48 cartons containing blank Bond Certificates and 104 Cartons containing blank Interest Warrants in our Strong Room at your request. The details of the cartons and their contents are being enclosed herewith.

Thanking you,

Yours faithfully,

(ARUN BHARGAVA)

Asstt. General Manager

Encl : As above."

7. Thereafter, plaintiff had been issuing letters and reminders asking for the payment of rental charges on account of storage of blank BCs/IWs. Reference in this regard can be had to the registered notices sent on 15.3.1988, 27.4.1988, 17.7.1988, 7.7.1991 & 13.8.1991. It was only on 13.9.1991 for the first time that the defendant stated that it had not made any commitment for making payment of storage charges. Hence the suit was filed.

8. Reading of letter dated 10.6.1988 and its reply dated 4.7.1988 would show that the rental charges for keeping the material in the strong room constructed by the plaintiff was not a part of the contract. Plaintiff had been insisting that he would be charging rental for keeping the material in its strong room. Defendant kept mum rather went on storing its material with the plaintiff knowing fully well that plaintiff was claiming rental charges. Surprisingly the defendant even in its reply dated 13.9.1991 never took the plea that storage charges form part of the contract hence plaintiff has not entitled the rental for this reason. Therefore, it cannot be said that this suit is based on any term of the contract which contain an arbitration clause. Plaintiff further contended that the strong room was not even in existence when the work order was awarded. Hence the question of storage at that stage could not have formed part of the contract. Since the strong room was constructed subsequently, therefore, negotiations started subsequently. Moreover, the contract price for the scope of the work does not include storage charges. As already observed above, none of the clauses indicate that storage of material by the plaintiff would be inclusive or part of the contract.

9. In view of the above discussion it can be safely concluded that the suit cannot be stayed because the claim made in this suit does not form part of the contracts entered into between the parties. The application is accordingly dismissed.